Tuesday, September 30, 2014

By Mike Bensi, advisor, FirstPerson Most people who give to nonprofit causes want to see results. They want to know that their donations made a difference.

After the recession with limited resources available, nonprofits have been challenged more and more by funders to operate like businesses to further their missions.

But what does that really mean?

This summer, four nonprofits' executives participated in a FirstPerson panel discussion called Fresh Perspectives. The group shared ways to incorporate business practices into their daily operations. Executive directors from Gleaners, Hamilton East Public Library, Day Nursery (now Early Learning Indiana) and Children's Bureau provided attendees with practices they instituted and what resulted.

At the Children's Bureau, Tina Cloer, president and CEO, established goals and expectations for employees that resulted in financial solvency. Simply collecting funds on time for services is one way that allows the agency to operate in the black and know when resources will be available.

Some might argue that the Children's Bureau's mission to offer emergency, temporary shelter for endangered children, runaway and homeless youth in Central Indiana cannot not have the same cadence and outcomes as the business world. Tackling social problems isn't a steady, chartable path. Progress looks and feels different, and it takes time. Lots of time.

But as Cloer revealed, adhering to sound business principles makes a nonprofit more likely to accomplish its mission, not less. In fact, business practices like transparency and public discussions can be safeguards for a nonprofit losing sight of its mission.

Simply said, running like a business means having a disciplined approach and an emphasis toward strategy.

All four panelists said that without a strategic plan, it would be difficult to define their organization's vision. Be aware that developing a solid plan takes time. Be patient.

They all agreed that while strategic plans are not easy to create, and means asking honest and sometimes hard questions, it is one way to get input from front-line employees or volunteers.

Ted Maple, Early Learning Indiana's president and CEO, discussed how important it was to get this input. The place he started was by asking several questions to help assemble a strategic roadmap for the organization:

Why do you work here?

What's going well?

What could be better?

What should I, as a leader, focus on?

Engaging others in the changes needed allows the organization to reach its objectives and realize the vision of the nonprofit. You can go fast alone, or go far with others. And don't be afraid to tackle this effort with your heart and your head. At the end of the day, running your nonprofit like a business is meant to help increase the effectiveness and clarity and help achieve the mission.

Who wouldn't want that for the organization and its donors?

For continued inspiration, I'd encourage you to download the session recap: http://info.firstpersonadvisors.com/further-your-mission-run-your-nonprofit-like-a-business.

Mike Bensi, advisor, FirstPerson, works alongside nonprofits and small business owners to design strategic plans that enhance the employee experience. His goal is to align an organization's culture with human resources, benefits and wellness. He has an MBA from IU Kelley School of Business and more than 10 years in progressive human resources management, including serving as the BMV's HR director.

As we put the finishing touches on the 2014 Indianapolis Nonprofit Salary Report, it doesn't seem possible that this is our third.

And as with past publications, it is our hope that the nonprofit community will use it widely. This bi-annual project was initiated four years ago to provide Central Indiana nonprofits with data that would help recruit and retain quality staffs. Based on what was happening in other communities, we thought that local nonprofits would find this resource an important tool for making informed decisions. It also was designed to provide board and staff leadership with the information needed to effectively lead their organizations and comply with IRS executive-compensation regulations.

Again this year, there is no charge to our readers because the generosity of our sponsors - FirstPerson, National Bank of Indianapolis, Delivra and VonLehman CPA - who provided funds to help the local nonprofit community make informed decisions. Their underwriting allowed us to collect data from 321 Central Indiana nonprofits, which is one of the largest nonprofit salary surveys in the country.

In a field where 100 to150 responses is the norm, it is important to note that this year responding organizations are up from 294 in 2012. We were also able to increase the data on leadership positions to 20, up from 12, and give the sector a wider range of common position titles.

Over the past six years, it has been rewarding to hear from area nonprofits staffs that find that the survey provides useful benchmarking information, and allows them to compare salaries and benefits. Before this survey, there was no local reference point and organizations would either use national surveys or find similar local nonprofits to use as benchmarks.

As in the past two reports, we also asked several questions of each participant about the trends in the sector.

Similar to two years ago, nonprofits identify the major obstacle to success as lack of funding. Although this year reflected fewer organizational funding cutbacks, an increasing number of respondents said their requests for services far exceed their ability to provide.

Tuesday, September 23, 2014

Social media can be a powerful tool, but many nonprofits
still struggle with how to use it effectively in fundraising. And quantifying
its effectiveness and understanding its psychology is even more difficult.

However, one Indiana college raised nearly $500,000 in a
24-hour day of giving. And while the dollar amount is impressive, the lessons
learned and applicability to nonprofits is more impressive.

Joe Klen, Wabash College’s associate dean for College Advancement,
came away with two clear directives from his school’s effort: Start small and
get a lot of people to help.

Before launching its campaign, Klen says Wabash studied what
other schools were doing, noting that they had a least a dozen models. Wabash then
narrowed its focus on Illinois Wesleyan University because of its similar size
and alumni population. Wesleyan had its first online day of giving last summer,
and Wabash’s advancement staff watched the reaction and interaction and then
traveled to Illinois in December to learn more.

While the research was important, ultimately Wabash needed to
jump in and see how an online campaign would motivate people.

Starting the process in February, Wabash pulled together a
campaign. It selected a date, created logos, prepared several sample emails,
tweets and Facebook posts and planned the school’s overall strategy. What the
team knew it didn’t want was a slick campaign, but rather a grassroots vibe.

While April 30, its choice for the day of giving, had no
particular significance for the small liberal arts college, it served as the
theme. The plan was to secure 430 gifts on 4/30, a number it felt was a modest
but realistic goal.

More important, though, was finding the right volunteers to
ensure success. While having volunteers is nothing new to fundraising, social
media is a different model. First, Klen’s department identified 300 potential
online ambassadors or virtual volunteers, looking for well-connected
individuals who were active social media users. After narrowing the field to
175, they spent April communicating directly with these alumni, phoning and
emailing them, oftentimes getting new ideas about the campaign from this group.

Well-prepared, the advancement department kicked off the
campaign at 4:30 a.m. with a first email to their entire alumni pool. They hit
the first target – 430 gifts -- by 10 a.m., creating an online buzz.

“When we launched the campaign, these ambassadors would
spread the word to their networks. That’s really what got the momentum going,
and then once people starting giving, all types of goodwill was being spread
across social media,” says Klen. Mainly, the school’s virtual volunteers used
Twitter and Facebook.

But Wabash
didn’t stop there. If the campaign reached $43,000, there were challenge donors
ready to match the gifts. A second group of donors was lined up to do the same
for the next $43K, and finally they had a donor who would give $43K, if they
hit 1,832 gifts, which is the school’s founding year.

“Other people who
weren’t ambassadors jumped on board and spread the word to their people,” says
Klen. “That’s what we saw happen in other institutions that were really
successful and were more successful the second time around.”

Klen says scale is key. “I think if we had started at 1832
donors in a single day, it would have had a much different feel. I think for a
smaller organization that doesn’t have the constituent base, starting smaller
is good.”

During the day of giving, Klen’s advancement team kept a
light touch, sending four emails to alumni during the 24-hour period. These
were to announce the campaign, key benchmarks and the results and initial
wrap-up of the campaign.

An online honor roll gave peers a chance to see in real time
who was contributing. It’s different from the infamous TV telethons because it
was more than just a total, and potential donors could see contributors’ names.
That’s where, Klen says, psychology has an effect.

Students and staff on campus also were giving online. It was
the last week of academic classes. There were campus events, like a dunk tank,
that created an on-campus buzz, but also an online buzz. There were alumni who
said, “Oh, I wished I knew that was happening, I would have come over for
lunch.”

Besides goodwill, Klen says, the biggest gains were introducing
current students to the culture of giving and creating an online reunion
atmosphere. In June at Wabash’s reunion weekend, alumni were
still talking about the event.

“There is some culture of philanthropy already engrained in
Wabash’s culture. The good feeling that came out of the day by rallying around
the institution on a single day is the greatest success of the day. Our
students saw the kind of rallying support for the institution in a single day
and that will stick with a lot of them for a long time,” says Klen.

“I think that’s true for most nonprofits. Not all
generations have been taught the importance of philanthropy. In part what I
think we’re doing in this kind of day is we taught our students on some level
how private organizations and nonprofits really work and how they rely largely
on private philanthropy.”

Klen noted that Wabash was not the only Indiana school with
this type of campaign. In April alone, 10 other schools had campaigns,
including Notre Dame, Purdue and Valparaiso. “I don’t want to suggest that our day was the
only day by any stretch of the imagination. St. Mary’s had similar numbers,” he
says. Klen believes they can all learn from each other and draw from different
constituencies.

What will Wabash do the second time around? It
will study schools that have done these two and three times, see what they did
differently and what new lessons they learned. And Wabash has already been
thinking about how to steward those first-time donors.

_______

Applications for nonprofits

Line up online ambassadors who are passionate about your cause and can build an online social media presence. Unlike Wabash, finding ambassadors’ friends with no prior affiliation to a nonprofit who are introduced to the organization has great potential.

For a nonprofit, competitions can work – Eastside versus Westside giving.

By 2 p.m. Wabash’s campaign (#Wabash430 hashtag) was trending in Indianapolis on Twitter. For Central Indiana nonprofits, that kind of exposure could be huge for getting their name out there to people who may not know about them.

All organizations can benefit from single-day campaign. The greatest benefit beyond fundraising is creating excitement about the organization and getting people excited about giving back.

You hear the expression a lot: Somebody is a natural-born leader. It may
refer to the battlefield, the ballpark, the political arena or the boardroom.

But is it true? In some cases, yes. Certain people may have the traits
to put them ahead of the crowd. But leaders can also be trained and nurtured.

The private sector allocates billions of dollars to leadership
development because it knows that skilled leaders are a powerful investment. Companies
know that effective leadership is the cornerstone of every organization and can
instill productivity, job satisfaction, engagement, retention and overall
profitability. Summarizing it simply, it
affects the bottom line.

The value of an effective leader can be measured in many ways: retaining
good employees, mentoring future leaders, creating a profitable culture that
values a team approach and supporting a company’s financial growth. There are also intangibles like garnering employees’
respect, admiration and an overall enjoyment of working for someone who has
effective leadership skills.

So why is something that is so critical often ignored, minimized or left
to chance? How do successful nonprofit organizations
look and identify leaders when they are hiring?

Although there is no magic formula that will guarantee how
effective someone will be as a leader, there are a few techniques that can help.
Here
are three steps to help hire the right person and invest in his or her growth:

·Establish a hiring
process that includes effective screening, interviewing and assessing of job
candidates

· Invest in potential leaders by offering
leadership training.

· Develop an evaluation program that allows
managers, colleagues and employees to offer input.

The best place to start is to have a framework assessment of the
leadership position and knowledge of the qualities, skills and aptitudes a
person needs to be successful in a particular position. Each candidate should
go through the same interview and assessment steps, which includes a battery of
questions specific for the position. Each answer should receive a numerical
rating from the interviewer. Making sure
the “right” person is being selected should be more of a science than guesswork
of feelings or emotions.

Once hired, individual employees should have a tailored-leadership development
program that provides specific training, tests for knowledge and supports
ongoing learning. Regardless of how long someone has been in a leadership role,
ongoing training and coaching is essential.

Being in a leadership role is challenging for many reasons in today’s
workplace. Therefore, having an arsenal of skills and techniques can help. A training program should include courses
that strengthen skills and techniques that are needed to be a great leader in
any organization.

Some areas that are essential aspects of great leadership are: effective communication skills, performance
management, motivational techniques, dealing with difficult employees and
building effective and strong teams.

The third and final step is for the leader to receive feedback. Self-evaluation and assessment is difficult,
if not impossible, to do objectively and impartially.

A tool that can be used is a 360-degree evaluation, which polls members
of an employee's immediate work circle.
Most often, 360-degree reviews will include direct feedback from
subordinates, colleagues and supervisors, as well as a self-evaluation. The purpose and objective is for the leader
to receive comprehensive feedback about how they are performing and provides the
leader a comprehensive overview of strengths, as well as opportunities for
growth.

Developing and grooming leaders is not only significant to the individual’s
work experience, but borrows a page from for-profits, it’s significant for the
overall health of the organization.

-->
Steve
Rossetti is the director of training and development at
Synergy. He has conducted training, consultation and executive coaching in
corporate settings, school districts, correctional facilities and nonprofit
organizations for over 25 years.He
attended Eastern Illinois University and earned a psychology degree and
graduate degree in education psychology

Thursday, September 18, 2014

The 2014
National Philanthropy Day (NPD) Luncheon is on Thursday, November 13.The Association of Fundraising Professionals
(AFP) proudly holds this annual event to recognize outstanding community
members who inspire change in our
community through generously supporting area nonprofit organizations.Registration is now open and will be solely
online this year.

We look
forward to introducing you to this year’s award winners at NPD:Philanthropists of the Year – Barbara and
Larry Kellar;Volunteer of the Year – H.
Richard Duval;and Outstanding Youth in
Philanthropy – Magnified Giving Student Philanthropy Program.

Additionally,
NPD gives all nonprofits a unique opportunity to thank their own Nonprofit
Champions -benefactors and volunteers
who impact their organizations.When
registering to attend NPD, indicate which of your guests are Nonprofit
Champions.They will be listed in the
NPD program and AFP will provide certificates of recognition for them, which
will be available for pick-up at NPD.Keynote Speaker, Erin Gruwell’s book, can be pre-ordered as thank you
gifts for your Champions, and nonprofits are encouraged to bring their own
tokens of appreciation to present at NPD.

National
Philanthropy Day is possible due only to our generous sponsors.NPD sponsorship supports our entire
nonprofit community by providing AFP with funding to hold educational programs
and networking events to benefit development professionals, nonprofit executive
directors and board members, and others who attend our sessions.Sponsorship also allows all of us to come
together – business, philanthropists, nonprofits and volunteers – at NPD to
celebrate our community’s strong philanthropic spirit.

We
hope to see you on November 13 at NPD to recognize our community award winners
and your Nonprofit Champions. For more
information including sponsorships and registration, please visit www.afpnet.org/AFPCincyNPD.

Tuesday, September 16, 2014

Four years ago when officials
from a local cultural and arts volunteer organization discovered that more than
$380,000 had been embezzled from its account, it was shocked. Over a nine-month
period, an officer supported his gambling addiction with money from the
organization’s bank account.

But according to a 2014 Association of Certified Fraud
Examiners study, that is not all that unusual. In fact last year, The Washington Post analyzed nonprofits’ 990 filings from 2008 to 2012 and
found more than 1,000 nonprofit organizations had checked the box indicating
they had discovered diversion of assets due to theft, investment fraud or
embezzlement.

The Association of Certified Fraud Examiners (ACFE) reported
the average loss is $108,000. But along with the loss of funds there is an even
greater potential cost -- damage to an
organization’s reputation.

External audits are of little help. According to the
ACFE, they detect just over 3 percent of the fraud cases.Instead, 42 percent of cases are discovered
as a result of tips from employees, customers, vendors or anonymous
whistleblowers. Other top methods are management
reviews (16 percent) and internal audits (14 percent). Seven percent of cases
are uncovered simply by accident.

Relying on tips and happenstance to discover more
than half of existing fraud cases is not good business practice. Despite having
limited time and resources that make nonprofits vulnerable to fraud either
internally or externally, organizations must be able to discover more cases on
their own.

Nonprofits typically have many checks and cash from
numerous sources making them vulnerable to skimming and cash larceny schemes. Billing
schemes are most common, and typically involve billing an organization for
personal items or excessively marking up goods or services.

One step that all
nonprofits should take is to develop anti-fraud controls that help decrease the
cost and duration of fraud schemes.

Some anti-fraud
controls include:

Create an independent board committee to
provide management independence and professional skepticism.

Develop a process to report suspicious
behavior.

Document when compliance at all levels occurs
and when it does not.

Develop a response plan when fraud does
occur.

Keep in mind that the tone from the top is important
to promote an ethical environment throughout the organization to encourage
self-policing.

But most importantly, nonprofit organizations
need to make sure they don’t ignore fraud issues because they aren’t prepared
to deal with them openly and honestly.

Nonprofits are typically most vulnerable to the following types of fraud schemes: billing, check tampering, expense reimbursements, skimming, corruption and cash larceny.

Skimming is when an employee accepts payment but does not record the revenue and steals the money.

Cash larceny is when an employee steals cash and checks from daily receipts before they are deposited in the bank.

In billing schemes, a person may set up a fake entity that bills for goods or services that the organization did not receive. Sometimes, the goods or services may be received but are marked up excessively with proceeds diverted. Another common billing scheme is to charge personal items to the organization.

Check tampering is when a person physically prepares a fraudulent check.

Corruption is the wrongful use of influence including bribery, kickbacks, illegal gratuities, economic extortion and collusion.

Jim Simpson, CPA and president of Financial Technologies and Management, is a financial leader and trainer, CFO advisor, and forensic accountant to nonprofit organizations since 1999, serving over 350 nonprofit clients. He has worked as a financial advisor for over 20 years.

Nonprofits can attain a reasonable level of security against the potential risk of a breach.

In 2006 to combat these breaches, the major credit card companies launched a security standards council to manage the evolution of security standards and requirements. For more information about the standards and materials available, click here.

The credit card association has defined four levels based on volume and provides assessment tools -- a questionnaire and vulnerability scanning -- to determine potential exposure to a breach.

Level 1: Any nonprofit regardless of how credit cards are accepted that processes more than 6 million Visa credit card transactions annually is required to:

conduct an annual on-site security audit.

conduct a quarterly network scan.

conduct an independent security assessor validation.

Level 2: Any nonprofit processing 1 million to 6 million Visa or MasterCard transactions annually is required to:

complete annual PCI self-assessment questionnaire and quarterly network scan of the database validated by the nonprofit or a qualified independent scan vendor

Level 4: Any nonprofit with less than 20,000 Visa or MasterCard e-commerce transactions annually and ALL other nonprofits processing up to 1 million Visa or MasterCard transactions per year are required to:

The end of the business day used
to be simpler. Merchants would protect their stores and inventory against theft
by simply locking the door. And while bolting the door was a safeguard, these
same storeowners were well aware that thieves might still find a way to enter
and steal valuable inventory.

Today inventory is not the only
consideration -- protecting consumers’ personal data from theft is equally
important. As breaches at Target, P.F. Chang’s and, most recently at Home Depot,
rattled shoppers’ confidence in the care of their personal data, nonprofits
must be concerned about the storage and protection of valuable credit card
information.

But
what protection services exist for nonprofits and what is mandated by law?

Today the payment card industry
(PCI) offers its Data Security Standard v2.0, which includes a password policy
framework. Those issuing credit cards require all merchants – including nonprofits
-- to protect not only the card data that may be stored on an organization’s
computers, but also donors’ personal identify information. That information is worth
millions and millions of dollars for thieves on the black market, and the
modern day data criminal is very smart, tech savvy.

For
nonprofits, the task is to secure the data and avert the risk of theft. While
computers and web connections have given us dramatic advances in productivity
and communication, they have also made it necessary for organizations to change
the way they protect their assets.

While storing credit card data might
make future tasks easier, it is also risky.Organizations often prefer to keep credit card information on file to
issue refunds, to process additional transactions, to settle outstanding
balances, as a convenience to regular donors and to process recurring
payments.

What organizations
fail to consider is the potential effects of a data breach, which can result in
brand damage, loss of client trust, unplanned costs to upgrade and maintain
computer systems, fines from regulatory entities, legal costs and business
disruption while attending to the breach.

So
what does a nonprofit do about this mess? The PCI offers some help (See
accompanying box). It has set up a list of standards that companies and
nonprofits must comply with depending on the amount of business they do.

But ultimately, it is up to
companies and nonprofits themselves to instill their own internal safeguards. Industry
specialists recommend that organizations use a multi-layered approach for
security against physical intrusion or computer intrusion.

Internal policies and
controls

Establish
a security policy and train employees to follow the policy.

Develop a system for investigating irregularities.
Consider creating a security SWAT team that includes management, IT and
accounting staff.

Create
a response plan for donors who believe his/her credit card information was
stolen after making a contribution. Include process for talking with the credit
card company and banks and logging conversations.

Technical internal controls

Monitor access: change default
logins for newly installed systems, ensure that each computer user has a unique
login ID and password, and review user information to ensure all current users
are valid employees or volunteers.

Secure network: install and maintain
a firewall configuration to protect their systems, then use and regularly
update anti-virus software.

Secure
personal information: TRUST3 is an independent, nonprofit organization that
enables trues-based privacy for personal information on the Internet. TRUSTe or
another privacy provider can help ensure that website privacy and email
policies provide protection to donors, members, volunteers and employees.

At the end of the day, it’s
important to remember to be safe, or to weakly paraphrase former President Clinton’s
one-liner,“It’s about security, stupid.”

Dave
Voris is a vice president for Horizon Bank in Indianapolis. As a senior
treasury management officer, he works closely with both middle market and small
business companies from a wide variety of industries.